| Aurora Loan Servs., LLC v Diakite |
| 2017 NY Slip Op 01528 [148 AD3d 662] |
| March 1, 2017 |
| Appellate Division, Second Department |
[*1]
| Aurora Loan Services, LLC, Appellant, v AmadouDiakite, Respondent, et al., Defendants. |
Akerman LLP, New York, NY (Kathleen R. Fitzpatrick of counsel), for appellant.
William Flynn, Brooklyn, NY, for respondent.
In an action to foreclose a mortgage, the plaintiff appeals, by permission, from an order of theSupreme Court, Kings County (Edwards, J.), dated December 19, 2014, which, after a hearing,found that it failed to negotiate in good faith during settlement conferences conducted pursuant toCPLR 3408, and, in effect, tolled the interest, costs, and attorneys' fees on the subject loan fromMarch 1, 2010, to October 27, 2014.
Ordered that the order is affirmed, with costs.
The plaintiff commenced this action to foreclose a residential mortgage after the defendantAmadou Diakite allegedly defaulted on the loan payments. Diakite subsequently submitted anapplication for a loan modification and completed a trial modification under the federal HomeAffordable Modification Program (hereinafter HAMP), making three requisite paymentsthereunder to the plaintiff on December 1, 2009, January 1, 2010, and February 1, 2010.Although the plaintiff accepted those payments, a loan modification was not offered to Diakite.Diakite made additional monthly payments, which were rejected and returned to him. Accordingto the report of the Court Attorney Referee (hereinafter the Referee), at a conference heldpursuant to CPLR 3408 on April 27, 2010, the plaintiff claimed that it had sent a modificationcontract to Diakite, but Diakite failed to sign and return it. Despite that claim, the plaintiff didnot produce the purported contract or offer proof that the contract had been sent to Diakite. Overthe next three years, the plaintiff made numerous requests for various additional documentation,including requests for documents that had already been provided, and required Diakite tocomplete numerous additional loan modification applications to two different loan servicers.Approximately 25 conferences were held before the Referee during this period. The plaintiffrepeatedly failed to comply with the Referee's directives to appear by counsel with knowledge ofthe loan modification and to produce the documents required by CPLR 3408 (e), as well as themodification contract that purportedly was offered to Diakite in early 2010. During this time, theplaintiff issued letters to Diakite that, without acknowledging the ongoing settlementconferences, thanked him for inquiring about HAMP, but informed him that he did not qualifyfor the program because, among other reasons, he failed to provide the requested documents.
In April 2013, the Referee issued a report finding that the plaintiff had failed to negotiate aloan modification in good faith and had not complied with HAMP guidelines. Thus, the [*2]Referee recommended that the Supreme Court conduct a hearing todetermine whether sanctions should be imposed against the plaintiff. The court held severaladditional settlement conferences from June 2013 to August 2014, but the plaintiff again delayedthe modification process by requesting additional documents after having previously indicatedthat the fully submitted HAMP application was under review. The plaintiff ultimately deniedDiakite's application, and on October 27, 2014, the court conducted a hearing to determinewhether the plaintiff had negotiated the loan modification in good faith. At the conclusion of thehearing, the court concluded that the plaintiff failed to negotiate in good faith and imposed asanction. The court, in effect, tolled all interest, costs, and attorneys' fees that had accrued duringthe period between March 1, 2010, and October 27, 2014.
Pursuant to CPLR 3408 (f), the parties at a mandatory foreclosure settlement conference arerequired to negotiate in good faith to reach a mutually agreeable resolution (see Wells Fargo Bank, N.A. v Meyers,108 AD3d 9, 11 [2013]). "The purpose of the good faith requirement . . . is toensure that both plaintiff and defendant are prepared to participate in a meaningful effort at thesettlement conference to reach resolution" (US Bank N.A. v Sarmiento, 121 AD3d 187, 200 [2014] [internalquotation marks omitted]). Compliance with the good faith requirement is measured by thetotality of the circumstances and whether the party's conduct demonstrates a meaningful effort atreaching a resolution (see id. at 203; CPLR 3408 [f]).
Here, the totality of the circumstances supports the finding that the plaintiff failed tonegotiate in good faith. The hearing evidence demonstrated that the plaintiff, among other things,engaged in dilatory conduct by making piecemeal document requests, providing contradictoryinformation, and repeatedly requesting documents that had already been provided (see LaSalle Bank, N.A. v Dono, 135AD3d 827, 829 [2016]; OnewestBank, FSB v Colace, 130 AD3d 994, 996 [2015]; US Bank N.A. v Sarmiento,121 AD3d at 204). The plaintiff, which failed to comply with the Court Attorney Referee'sdirectives to produce the documents required under CPLR 3408 (e), also failed to produce anyevidence relating to the four years of loan modification negotiations, including the modificationcontract purportedly sent to Diakite in March 2010. Accordingly, under the circumstances, theSupreme Court properly concluded that the plaintiff violated CPLR 3408 (f) by failing tonegotiate in good faith (see Onewest Bank, FSB v Colace, 130 AD3d at 996; U.S. Bank N.A. v Smith, 123 AD3d914, 917 [2014]).
Contrary to the plaintiff's contention, the sanction imposed in this case, which tolled interest,costs, and attorneys' fees accrued during the period the plaintiff failed to negotiate in good faith,was a provident exercise of the Supreme Court's discretion (see LaSalle Bank, N.A. vDono, 135 AD3d at 829; U.S. Bank N.A. v Smith, 123 AD3d at 917). Although notapplicable to this case, we note that CPLR 3408 has been recently amended, and now expresslyprovides that upon a finding by the court that the plaintiff failed to negotiate in good faith, "thecourt shall, at minimum, toll the accumulation and collection of interest, costs, and fees duringany undue delay caused by the plaintiff" (CPLR 3408 [j]).
The plaintiff's remaining contentions are without merit. Rivera, J.P., Cohen, Miller andBrathwaite Nelson, JJ., concur. [Prior Case History: 46 Misc 3d 1202(A), 2014 NY Slip Op51778(U).]